There are a number of different ways for you to be able to trade with currencies. The most popular being Forex Spot, Futures and Options.
- Spot Market: in this Market, currencies are traded immediately or “on the spot”, using the current market price. This market provides simplicity, liquidity relatively low spread and round the clock operations. It’s very easy to participate in this market since accounts can be opened with as little as $200. Aside from that, most brokers will usually provide charts, news and research for free.
- Futures: are Contracts to Buy or Sell a certain Asset at a specified price on a future date. Forex futures were created by the Chicago Mercantile Exchange (CME) in 1972. Since futures contracts are standardized and traded though a Centralized Exchange, the Market is very transparent and well-regulated. This means that price and transaction information are readily available.
- Options: An Option is a financial instrument that gives the buyer the right or the option, but not the obligation, to buy or sell an asset at a specified price on the options of the expiration date. If a trader sold an option, then he or she would be obligated to buy or sell an asset at a specific price at the expiration date.
Just like futures, options are also traded on an exchange, such as the Chicago Board Options Exchange, the International Securities Exchange, such as the Chicago Board Options Exchange, the International Securities Exchange, or the Philadelphia Stock Exchange. However, the disadvantage in trading Forex Options is that market hours are limited for certain options and the liquidity is not nearly as great as the futures or spot market.